Numerous unpredictable events can shake your supply chain. Terrorist attacks, storms, global pandemics and trade wars are just a few. Although it is impossible to totally shield your supply network from these unpredictable situations, diversification is one of the best protective strategies.
What Is Diversification?
Thousands of components are combined in the manufacturing of your goods, possibly including Texas Instruments electronic products. By the time they reach your factories, they may have traveled across the globe and passed through the hands of first, second and third-tier partners. However, if they only originate from one source with whom you have a relationship, your company will immediately experience bottlenecks and outright interruptions if that supplier goes out of business, experiences a natural disaster or is shut down due to human-made causes. By contrast, a diversified supply chain is resilient since it allows you to have alternatives should your primary vendor fail.
The Advantages Of Diversification
Expanding your options starts long before problems arise. During a period of relative calm, your company should source, pre-qualify and onboard vendors who can step in should your main supplier fall short. That way, your response time is much faster when a disruption occurs. In the end, snags will be minimized, and your company will save money.
Culling suppliers of all sizes and from multiple regions also lowers your chances that a geographically-based disaster will seriously affect on-time product delivery. Try to obtain a mix of vendors, keeping in mind that small businesses may be more agile but are not as stable while larger ones may be slower to pivot during changing times. Carefully evaluate suppliers against each other, weighing what they can bring to your organization against their risks. This helps to ensure that you get the best value, not just in cost savings but in terms of overall return on investment.
Diversification For Electronics Manufacturers
Diversifying the supply chain is particularly difficult for electronics manufacturers. This is because China has established itself as the main provider of specialized components production and the home of key suppliers. Some specialized products can only be sourced by companies in this region. While diversification of other parts of the supply chain may be possible, organizations like yours may, for the time being, continue to be forced to have only a limited diversification strategy.
To minimize the potential effects of this situation, manufacturers are diversifying in the areas where they can and implementing inventory stockpiling for those harder-to-source raw materials and components. In the next few years, consortiums of supply chain managers and other industry officials may work with governmental entities to promote a more global approach to the production of these specialized goods.
Diversification helps to mitigate risk when disaster strikes. Even if your company cannot implement it universally, reaching out to a less concentrated pool of suppliers is in your overall best interest.